The French Elections and You 2

What’s the worst that can happen when the election results are in – at least so far as the EC is concerned (as well as the EUR crosses)?

Melenchon and Le Pen being the only contenders for the May 7 run-off.

The second worst?

Le Pen securing a vote in the high 40s against either against Macron or Fillon.

The best?

Outright victory for Macron by his securing over 50% of the vote.

I doubt if we’ll see any of the above results.

The polls are suggesting a Macron-Le Penn face-off on May 7. But, let me throw in a spanner. The momentum of Melenchon has been so strong, I would not be surprised to see him figure in the results.

It seems to me anything but a strong Macron showing will cause a drop in the EU crosses. And, given the doubt about the turnout and the terrorist attack in Paris on Friday, I rate a strong Le Pen win more likely than a Macron.

So, how to take advantage of this view?

I don’t normally trade the CHF. But, I will on this occasion – mainly because of the Swiss decision on immigration will serve the CHF well. Moreover, the long-term chart of the EURCHF shows the strong downtrend that lately has seen only dead cat bounces (Figure 1).

Figure 2 shows a clearer 18-day swing picture. Acceptance below 1.063 will probably see a test of the 1.0305 to 1.0238 zone. That would be my target for this move down – if we see it happen.